Thank you for standing by. This is the conference operator. Welcome to the Torex Gold Resources, Inc. 2nd Quarter 2021 Results Conference Call. As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions. I would like to turn the conference over to Dan Rollins, Vice President, Corporate Development and Investor Relations. Please go ahead, Mr. Rolland.
Thank you, operator, and good morning, everyone. On behalf of the Torex team, Welcome to our Q2 2021 conference call. Before we begin, I wish to inform listeners that a presentation accompanying today's conference call can be access through the Investors section of our website at www.torrexgold.com. I would also like to note that certain statements to be made today by the management team may contain forward looking information. As such, Please refer to the detailed cautionary notes on Page 2 of today's presentation, as well as those included in the Q2 2021 MD and A.
On the call today, we have Jody Kuzanko, President and CEO as well as Andrew Snowden, CFO. Q2. Following the presentation, Jody and Andrew will be available for the question and answer period. This conference call is being webcast and will be available for replay on our website. This morning's press release and the accompanying financial statements and MD and A are posted on our website and have been filed to SEDAR.
Also, please note that all amounts mentioned in this call are U. S. Dollars unless otherwise stated. I'll now turn the call over to Jody.
Thank you, Dan, and good morning to all on the line. Welcome to the Torex Gold Q2 results call. It's been an eventful first half. Highlights are as follows. Solid operational performance in spite of ongoing challenges related to COVID and metallurgy issues as we mine deeper in the pits.
We're on track to deliver 2021 production and cost guidance. And after months of study, some key strategic decisions have come to ground, which we think bring enhanced clarity and certainty around the path forward for the company. In terms of the agenda for the call, I will provide a brief reminder of the strategic plan we are working to, then I will step you through the key business and operational highlights specific to the Q2. Then I'll turn the call over to Andrew Snowden for some detail on the financials. And after that, I'll provide a progress update on our critical projects, the key decisions that have been landed and close with some commentary relating to the completion of our Board refresh.
Dan has touched on the Safe Harbor language, so I'll move straight to the content Slide 4. This slide sets out the 5 pillars of our strategic plan. These remain largely unchanged. We've been very disciplined about executing this plan systematically and have made substantial progress in the first half of twenty twenty one. On that first pillar of optimize and extend ELG, optimization efforts are evident in the continued delivery of ounces plan.
In terms of extending ELG, we published the updated ELG MRMR in the first quarter, showing a 15% increase in underground reserves over 2019, and we are on pace with our 40,000 meter 2021 drill program at ELG Underground. Additionally and importantly, we've now received Board approval to proceed with the pushback at El Limon pit. I consider this to be just right sized or fit for purpose. Spending just enough capital to add approximately 150,000 ounces to that transition period between ELG and Medialuna in late 'twenty three, mid 'twenty four. There is more detail on that at the end of the call.
On the 2nd pillar of derisking and advancing Medialuna, we have made the risk based decision to advance the Medialuna feasibility study on the basis of conventional mining and development methods. We're also continuing the Medialuna infill drill program through the second half of 2021, which is completely consistent with the shift in strategy to increase focus on exploration. We're adding another portal on the south side of the river to access the lower portions of the Medialuna deposit. And critically, we've now submitted to the regulators our permit application for the MIA integral. I will discuss all of this in more detail as we move through the slides.
1st on Slide 5, starting with the as is business. This slide sets out some key operational and financial highlights for the Q2. We delivered 118,000 ounces in Q2, placing us at 247,000 ounces midyear. Clearly, we're well positioned to deliver on production guidance of 4.30 to 4.70. That said, I would caution not to expect that we will exceed 4.70 given that grade will trend closer to reserve levels for the second half of this year.
Our total cash costs in ASIC at midyear are tracking better than the best end of guidance on both parameters. There were and will continue to be some offsetting puts and takes in these numbers, increased reagent consumption, offset by PTU accruals under new legislation. Both Andrew and I will address this in further detail on the update. The cash generation capability of this asset continues to show itself with a year to date AISC margin of $9.22 an ounce, over 50% per ounce. Given that, we were able to add to our bank balance and conclude the quarter with $196,000,000 in cash and no debt given that, that was cleared off in Q1.
So with the large tax and PTU payments behind us in the first half, We expect the second half of the year to deliver healthy cash generation and to add to our total liquidity, which is completely consistent with our plan to cash up ahead of the Medialuna build. Now on this next slide, I've already briefly touched on 2021 guidance. This slide sets out some of the specifics. 3 key takeaways here. Production and total cash costs are tracking within original guidance.
2nd, the range on capitalized waste has been increased by $15,000,000 This is on account of the additional stripping that will be done in the Aliment pit for the second half of 2021, given that we are proceeding with the pushback. Of note, we're not increasing the AISC range, Given that we're tracking beyond best end as of the middle of the year, we're keeping that range at 920 to 970, but I would expect it to come in towards the upper end of that range given the addition on capitalized waste. Thirdly, that last line there in the chart, though we haven't changed the non sustaining capital guidance, we are guiding toward the very upper end of that range as well. Given 2 key additions to the plan. First, we've allocated $7,000,000 to an expanded infill drill program at Medialuna and another $15,000,000 for a lower portal on the south side of the Medialuna deposit.
Given the broad range that we started with and progress year to date on the non sustaining capital program, we expect to conclude the year at or just above the $150,000,000 guided. Now while I didn't mention ESG strategic pillar at the outset, we would be remiss not to highlights for the quarter, which sees us on path of continued ESG excellence. Three points here. 1 in the top left quadrant. While COVID is settling in for yet another wave in Mexico and case counts are sadly on the rise, We're maintaining our existing approach of adherence to strict protocols, and we bolted on a specific vaccination program in concert with the local health authorities.
At last week's count, we have more than 1100 people with at least one dose of vaccination. This is critical to safe operation moving forward. 2nd, despite a lost time injury in the quarter when a diamond drill contractor was struck by a hose that got tangled up in a something I'm very proud of, a continued world class safety performance. And you'll note on the right hand side of that slide, we've been working hard disclosure to reflect the reality of the good ESG work we're doing on the ground in Mexico. And this is shown up in the improved ratings you see on the slide.
Notably, on the ISS scoring on social and governance, our rating has now gone to 1. Lower is better on this scheme, and so it's the highest score possible. Turning now to some additional detail around operational performance. If you step back and look at these quadrants. You can clearly see the operational stability depicted by the bar charts over the last 4 consecutive quarters.
I will draw your attention to a couple of highlights and a low light, starting with the low light first. Average plant throughput for the quarter was just under 12,000 tonnes per day, lower than the last 3 consecutive quarters and definitely not what we wanted. Ironically, it was our best ever performance on delivering the monthly maintenance plan. The team just did an outstanding job with planning, scheduling and execution for each monthly maintenance shutdown in the quarter. The issue was that the metallurgy through the circuit with higher iron and copper and sulfides forced us to slow down or shut down the plant for a cumulative 60 hours in the quarter.
We really did need additional residence time in leach to reach targeted metallurgical parameters with a view to maintaining recoveries and not wasting gold to tailings. On that note, recoveries was a highlight. Maintaining 88%, which is 1% above design in the face of those metallurgical challenges is a testament not disappoint once again, setting another quarterly record of over 1400 tonnes per day at an average rate of 7 grams per tonne. This performance certainly supported delivery of ounces in the quarter. Now this next slide sets out how the unit cost took shape in the first half year.
Two notes. 1, you can see in that first line that our open pit mining costs are up slightly over 2020. As reported with our Q2 production results, our rope con has been down for repair since early June, when some wear was detected on the belt during a routine maintenance inspection. Given the specialty nature of the equipment, a splice kit had to be sourced from Europe and technicians flown in to install this. We expect it to be back in service by mid August.
While the team has done an excellent job to maintain production and blending by trucking ore from the pit down to the process plant. This event has driven up our maintenance and rehandling costs. 2nd, you can see that processing costs were up to $38 a tonne in the quarter or $35 a tonne on the half. This is driven by the cyanide consumption. With our historical cyanide costs coming in at an average $2.25 a kilogram, This impact to processing costs was not insignificant.
We have several key initiatives underway to mitigate the higher reagent consumption, including operationally, further refinement of our GeoMet modeling and what I now call precision blending strategies. And from an engineering perspective, we're looking at the possibility of bringing forward the installation of some aspects of the Medialuna flow sheet to deal with the soluble iron, namely the water treatment plant and the iron flotation circuit. And you can see on that slide, if you look at the 3rd line against The last line, the offsetting cost of the higher reagent consumption versus the new treatment of the PTU given the new legislation that Andrew will detail. On that note, I'll now turn the call over to Andrew for a review of the financial performance.
Thank you, Jody, and good morning, everyone. So Q2 was another strong financial quarter for us with $22,000,000 of positive free cash flow generated despite the annual Mexican profit sharing payments of $30,000,000 was made during the quarter and that payment relates to the profit sharing for the 2020 year. In addition, there was $60,000,000 investment in capital expenditure during the quarter, primarily focused on Media Luna. Slide 12 provides a summary on our financial results and I wanted to provide some comments on some key drivers in the quarter. Firstly, we generated revenue of $206,000,000 and EBITDA of $127,000,000 in the quarter.
Although these outperformed consensus, they were both down $25,000,000 on Q1. And this change is primarily sales volume driven as we sold 18,000 ounces of gold less in Q2 compared to Q1 and that was partly offset by a $40 an ounce higher realized gold price in the 2nd quarter. Given this lower Q2 sales volume. We closed the quarter with around 10,000 ounces of dore on hand and this should support sales volume outpacing production in the second half of the year. On costs, we again reported strong TCC and ASIC cost performance with a 50% ASIC margin in the quarter.
There are 2 key offsetting impacts within this performance I wanted to just briefly highlight on higher cyanide and lower crude PTE profit sharing costs. Firstly, on cyanide, due to the higher soluble iron levels we were seeing in the ore, signed consumption rates are expected to be higher in 2021 than initially planned. As Jody noted earlier, we saw consumption levels in the first half of the year approximately 2 kilogram a ton higher than last year and we expect higher cyanide consumption to continue through 2021. For full year 2021, I expect this will impact costs by about $15,000,000 to $20,000,000 compared to the initial plan. Next on the PTE profit sharing.
As I noted on the Q1 earnings call, tax reform on the Mexican PTE profit sharing payment was enacted in April of this year. From a financial standpoint, the main impact of Torex is the introduction of a cap on the PTU payment at the higher of 3 months salary or the trailing 3 year average payment and this is calculated on an individual employee basis. For most of our employees, the 3 year average will be the most relevant cap. And so I expect the 2021 PTU amount, which is payable in Q2 of next year to be approximately $20,000,000 This is $15,000,000 than initially budgeted. Looking forward, our guided TCC range of 6.80 to 7.20 ounces, dollars an ounce is still a good number as we'll see some higher mining costs in the second half of the year as we mine some slightly lower grade material as Joey referred to, William.
Moving now to Slide 13, you can see here in the cash waterfall, our cash balance increased by $24,000,000 during the quarter, which was driven by the strong EBITDA performance. In general, the movements on this chart should be self explanatory, but I'll highlight a couple of items here. Firstly, the changes in working capital you see here primarily represent the $30,000,000 PTU profit share repayment made in the quarter relating to the 2020 year. This was offset by net collection of about $13,000,000 in VAT. You'll recall from the Q1 earnings call, I did flag that we were experiencing some administrative delays in VAT collections and I guided that these would be resolved in July.
In fact, we're able to resolve these administrative matters earlier than expected and saw payments resume in the month of June, collecting $35,000,000 of outstanding VAT in that month. And we're now caught up to where we expected to be mid year 2021. Secondly, on capital, you'll see on the chart here that we invested $43,000,000 in non sustaining results during the quarter and that was primarily related to Media Luna as we continue to execute on the early works, Media Luna infill drilling and the feasibility study through the quarter. I expect overall non sustaining capital to continue at the levels you're seeing here in Q2 2 through the balance of the year. Turning now to Slide 14, the key takeaway here is Our balance sheet continues to strengthen ahead of the Media Luna build despite the significant capital investments I referenced on the last slide.
As referenced earlier, we closed the quarter with cash of $196,000,000 and we also have available liquidity of 3 $45,000,000 in total when you include our available capacity on the revolving credit facility. And I expect this available liquidity amount will continue to increase as the year progresses. Finally on Slide 15, this is just my typical quarterly reminder on the seasonality of our cash flow generation, which you can see here will be cash will be back half weighted. The large annual tax, royalty and PTU payments are now behind us in 2021, which will support stronger operating cash flow in the second half of the year. Quarterly payments in the 3rd Q4 will now be focused on 2 items.
Firstly, tax installments that I've guided in previous quarters, tax installments are typically within a range of $7,000,000 to $8,000,000 a month. And we've seen that to be at the higher end of that range in the first half of the year. And I expect will trend towards the lower end of that range for the remainder of the year as taxable income will be impacted by an anticipated higher cyanide and mining costs I referenced earlier. Secondly, there's the quarterly 2.5 percent royalty payments, which will be made and that approximates $5,000,000 a quarter. And with that, I'll turn the call back to Jody.
Thanks, Andrew. Turning now on these last few slides to some updates on our key projects. As we work through our strategy and we set the foundation for the future at Morelos. This slide sets out some detail around the pushback at the Alimond pit. It's been approved by the Board.
This will add approximately 150,000 ounces through the transition period from ELG to Medialuna in that critical late 'twenty three, early 'twenty four period. The work is already well underway, and I've already touched on adding the $15,000,000 non sustaining capital for Strip in the back half of twenty twenty one. Now just a couple of comments about Strip. You can expect it to peak in 2022 and then fall away significantly after that. Over the 4 year pushback, strip ratio for the pushback only comes in at about 15:one, which results in the remaining open pit life of mine strip at 7:one.
Without the pushback, it was 6:one and now it's 7:one. Given that over time, costs will ultimately fold into the mining costs for the open pits, we won't detail those publicly, we don't give out zone by zone updates of that nature. I will say, however, that the pushback generates positive cash flow down to $1300 gold. So it was a sensible business decision, and I think of this as a profit making insurance policy. These pushback ounces will be incorporated into a multiyear production outlook that we plan to release to market in the coming weeks.
Additionally, on this slide, you'll see some information about the 2nd focus area of the strategy to ensure a smooth transition from ELG to Medialuna. And that is continued exploration, development and mining of our ELG underground. So there are two items of note here. First, we're progressing on our Portal 3. And second, we're advancing our exploration program as planned.
We've now transitioned to a focus on step out drilling through the back half of twenty twenty one. A reminder that, that program was 40,000 meters at ELG underground for this year. Now this next slide, there's lots of text on it, but it sets out really 3 key additional developments on our projects. 1st, After what amounts to a few years of study, we've made the decision to advance the Medialuna feasibility study on the basis of conventional mining methods and not Muckahi. There were many and varied considerations around this decision making.
These included: 1st, the absence of any meaningful upside associated with deploying the technology either on an economic analysis through the lens of IRR, NPV, CapEx or OpEx or on schedule considerations. We also consider the stakes involved for Torex. While not our only operating mine in Guerrero, Medialuna will be a primary source of feed starting in 2024, and it's a big mine. We also considered the results of the test program at El Limon Deep, which just concluded, specifically the rates achieved on development, both laterally and on the steep ramp and the rates achieved with stoping and backfill. This program, this test program showed us that there is process and engineering to be done on this technology.
We also considered risk mitigation in the event that the technology didn't perform quite expectations given its level of maturity. Specifically, for Medialuna, once 2 steep ramps are driven around that deposit, There is really no plan B without significant cost or schedule disruption. So rather than bet the farm on the new tech, we'll consider excluding in the upcoming technical report, Amokahi Case at EPO. EPO is a smaller adjacent deposit outside of Medi If we do consider this in the technical report, it will be at the PEA level. For the second half of twenty twenty 1, no further funding will be allocated to the Muckahi testing.
We guided to spend $8,000,000 on the program in this year, and that has been spent. Instead, we'll spend additional non sustaining capital through the second half of twenty twenty one on other items that will derisk in Advanced Medialuna, and those are noted on the right hand side of the slide. Dollars 7,000,000 to continue to infill drill. We're really just keeping the 8 drill rigs turning for the rest of the year and expanding the 2021 program from 44,000 meters to 83,000 meters. And we'll add $15,000,000 for an additional portal on the south side of the river into the lower part tunneling of the Medelluna deposit.
This is important because it will enable us to open up the entire lower portion of that deposit, so we have enough development to for the successful ramp up. And this tunnel at the lower part of the deposit has the additional upside of positioning us to continue tunneling from south to north to meet up with OHA has tunnel coming in from the other side. This provides mitigation for a key schedule risk in the development of Medialuna. Now this last slide, no text, lots of pictures. It includes some photographs of various aspects development of Medialuna.
In the upper left, you can see a picture of the monorail based equipment dumping waste at Saduajes Tunnel. And in the bottom right, You can see the portal prep work for the South Portal Upper is well advanced, and we expect to color the portal this quarter. Finally, a word about governance. Our Board refresh has concluded and was endorsed with overwhelming support of our shareholders at the AGM. Tony Giardini, Jennifer Hooper, Jay Kellerman and Rosie Moore have officially assumed their positions.
Rick Howes has also stepped into the role of Independent Chairman of the Board. I'm completely confident that we have the right mix skills around the table to deliver Torex's 2nd act. With a new Board and some key strategic decisions behind us, Our long term plan is coming together nicely, and we're just going to get on doing what we do best, which is executing on the plan. With that said, subject to any questions, I will turn the call back over to Michelle.
We will pause for a moment as callers join the queue. The first question comes from Blaise Adams of CIBC. Please go ahead.
Sorry if I missed it, but 150,000 ounces in the pit layback, can you comment on the grade of those ounces? Is that in line with the reserve grade?
Yes, that's right, Bryce. It's in line with the reserve freight at the pit.
Okay. Thanks. No big change there. The next question was just on the Wajares tunnel. With the changes to the conventional mining at medialuno conventional mining and the feasibility.
Does that impact your advance rate in that tunnel at all? Or are you still targeting The 10 meters per day in the back half of the year?
Yes. We're still targeting the 10 meters a day, Bryce. The decision not to advance the Medialuna feasibility study on the basis of the Muckahi technology doesn't change the process plan for advancing the Waha's tunnel using the monorab based technology. The risk profile on those two things are materially different. We're driving laterally, not on a steep ramp.
We're not drilling at the phase with the monorail based drilling. We're using a 3 boom jumbo that's wheel based, and we're not using the flushing. We are instead using a hag loader and loading onto a tramping there and then jumping into the boxes to move it out. We think that system, taken altogether, once we get it up and running, will deliver an advance rate that conventional advance rates and we're still targeting the 10 meters a day. Whether we get there is another question.
Got that. So still a hybrid approach there. But maybe with the change to conventional mining at Media Luna, Is there any design change to that tunnel, the profile size of the tunnel? Could you make it smaller? And would that help you with the answer?
So we're not changing the size of the tunnel. It's 6x6.5 and we're keeping it that way. The decision to advance Medialluna on the basis of conventional technology doesn't change the size of that.
Okay. Just on the cost profile, you guided to all in sustaining costs in the high end, upper end of the range. Is that when you say that, do you mean that all in sustaining costs for the full year will be in the high end or for the second half? Because If you're tracking at $874,000,000 for the first half, for the full year numbers to be at the high end, they're going to need to be much higher than the high end of the range The second half is how should we be looking at that?
So Bryce, I mean your initial if I'm Andrew here, your initial comments were correct and that it's So we're guiding that we'll hit the range for the full year or the upper end of the range for the full year. And you're right, so that means the second half of the year now will have a higher cost profile or high ASIC profile. And one key driver for that is The additional stripping costs and sustaining costs related to that that Jody referred to earlier and related to the pushback.
Is there anything else other than the stripping costs? Because it's even adding in that extra $15,000,000 a strip, I just I'm not sure I can quite get there.
Well, so the second driver which I referred to was around some higher mining costs in the second half of the year. And so we are expecting that to trend upwards in the second half Because of the lower grades that we'll be mining through the back half of this year.
Okay. Thanks. I'll take another look at that. My last question is just on the underground performance. It's been good.
Can you remind me, is that still with the contractor or is it owner mined? And if it is with the contract, is there any I think there was at some point some thoughts to changing to owner operator?
It's still contract mines, Bryce, and there are still those slots.
Okay. Thanks a lot for answering the questions. Talk to you all again. Cheers.
Thanks, Bryce. Be well.
Our next question comes from Wayne Lam of RBC. Please go ahead.
Hey, good morning. Just curious on the cyanide usage, if The usage this quarter is kind of a run rate that we should be thinking about as we move along and into the later years as well. It seems to be relatively high relative to what you guys were doing last year. And so just curious if we should kind of model that kind of cost impact going forward.
Hi, Wayne. Yes, the usage of this quarter was just over 6 kilograms a tonne. Last year, you'll recall that once we implemented that oxidation program through a leach, we rounded out the year at about 3 kilograms a tonne, which is where we wanted to be. Moving forward, given the efforts on blending, etcetera, I think it's probably safe to model in the 5 kilogram a tonne range. And that comes with a caveat.
If we're able to land the aspects of the Medialuna flow sheet to deal with that soluble iron, then that number will tank significantly. And so the question is, can we do it? What will it cost? How fast can we pull it forward? And does it make any sense to do so?
And as I said in my commentary, that's under investigation at the moment.
Okay, perfect. Thanks. And then Just curious on the cyanide and reagents themselves. Have you guys been seeing any cost inflation on that front?
No, actually, we're holding pretty well at $2.25 per kilogram. One interesting development that I didn't mention in the commentary is that we're looking at using an aggregator in the country on cyanide supply. If we can get together with a couple of other mining companies to support us in driving down unit costs, we'll certainly explore all options associated with that.
Okay, great. And then maybe just moving to Muckahi, as you guys did the testing over the past couple of years, just curious If you had more specific detail on where there were areas of further optimization relative to what was outlined in the PA?
Yes. I think the areas of focus For further optimization, we'll be steep ramp development, loading the muck boxes on the steep ramp and testing the loading to muck box integrated aspects of the system. So, the commentary on Muckahi, I want to be clear, isn't any kind of commentary about the potential of the technology. Its commentary about where the technology is and the massive stakes associated with deploying that technology at Medi Luna for Torex.
Okay, perfect. Understood. And then maybe just lastly on the lower portal, I was just curious when that decision was made to implement that. And I guess Given that you guys hadn't increased the non sustaining capital guidance, was there some kind of offset to that or were you guys just trending towards the lower end of range for the year?
That decision on the South Portal lower was under investigation for the first half of this year. We had been carrying it as an option, depending on how the decision laid down with conventional mining versus Muckahi mining. And we've been trending lower on the non sustaining spend for the first half of the year, hence the guidance towards that $150,000,000 range with the addition of sub portal lower and the continuation of the infill drill program.
Our next question comes from Trevor Turnbull, Scotiabank. Go ahead please.
Yes. Hi. I just had a couple of follow ups, I guess, further on the Muckahi. I understand you Have kind of used up the budget for test work on it this year. And obviously, there's further work that does need to be done in terms of optimizing it and kind of testing its capabilities.
So I'm kind of wondering how does it move forward from here? Will there still be work done with Muckahi and kind of what's the schedule for continuing to kind of optimize that?
That's under assessment for us right now, Trevor. What we did know for sure is that given that we've used the $8,000,000 for this year and we had higher non sustaining capital priorities for the back half of twenty twenty one given the strategic priority to derisk and advance Medialuna, We're just going to take a pause on it. If we pick it back up in 2022, we'll certainly let folks know.
Okay. And I heard you talking to Wayne about it, and that you're not drawing any conclusions about the potential going forward. But one of the comments I was curious if you could elaborate on a bit and that is that aside from the risks associated with trying to And keeping Media Luna on schedule. You mentioned that it didn't there wasn't a strong case on the financial side. And I was just wondering, are the costs associated with Muckahi not really coming through the way that you had anticipated potentially in terms of because I thought that Muckahi, part of its appeal was the ability to actually be a means of cost savings in terms of development.
I just wondered if you could comment a bit on the financial aspect.
Yes. I mean, I think that appeal is still there. As I said, there's lots of potential in the technology. And as you know, Trevor, I mean costs are rolled up on the basis of assumptions, how fast you go, what the advance rates are, how fast you can clear them up from the face. And so we had to use the data from the test program to formulate the assumptions to build up the mine plan to roll up IRR from which comparisons were made from the Muckahi case to the conventional case.
I won't give out details on that, but I will say When we ultimately did the IRR comparison between the conventional case and the Muckahi case, that big differential that you saw in the PEA closed substantially. And so I do think there remains upside on Muckahi depending on what it's able to achieve in either test or small mine deployments in the future. But the assumptions that we used sort of negated what the upside could be on either cost or schedule, both of which are important to us.
No, I understand. And obviously, until it's running as well as you would like, obviously, the costs aren't going to reflect its potential. My last question, sort of Muckahi related, but not really is just on the EPO deposit that you did mention as a place where you might still potentially find use for Muckahi. I was just wondering, can you tell us a bit more about that? You said It was separate from Media Luna, but similar.
And I just don't remember hearing a lot about that before, and I was curious if you could give us a bit more detail.
Sure. EPO was in the PEA. It's about an 8,000,000 ton resource, a little lower gold equivalent grade than Medialuna, right around 3.5 grams ton gold equivalent. It's literally a right turn off of the Waha'is Tunnel south of the Balsas River. And so that to my mind, Trevor is still a potential for the Muckahi technology depending on its evolution over the next couple of years.
That's deprioritized for us as relates to the development of Medialuna. But we're certainly keeping the possibilities open to tuck that in later, smaller ore body, potential testing ground and something that we have ready access to in the mine plan after Medialuna.
Okay, I understand. Well, you made a lot of big decisions this quarter and a lot of good things to see. Thank you very much.
Thanks for the questions, Fran.
Our next question comes from Ryan Thompson of BMO. Please go ahead.
Yes. Hey, Jody and Andrew. Thanks for the update. I think most of my questions got asked, but maybe just one on the Ropecon. Sounds like maybe a couple of weeks of slippage on getting it repaired.
Can you just remind us, Is that Ropcon going to be used throughout the life of the ELG pits and how that ties into pit layback?
Yes. I mean, we'll continue to use the rope conduit at the life of the ELG pits. Ryan, that's the short answer to the and yes, some slippage in the schedule. I mean, it's a highly, highly individualized piece of equipment. Throw COVID over top of that and sourcing slight kits from Germany and getting the right personnel on the ground after they've been COVID cleared and COVID tested.
It was a bit of a trick. And so We're looking at mid August now to get that back up and running. I will say this, we've ordered 3 slice kits, not one. So in the event that there's any sort of wear in the future. We have that on hand.
Got it. Perfect. No, totally understandable on with everything that's going on in the world with COVID and whatnot. Maybe just sort of Shifting gears here to the balance sheet. Can you just talk a little bit about the balance sheet?
Are you comfortable as you sort of progress feasibility study work on Media Luna. Are you seeing any sort of inflationary pressures coming through in the feasibility study and is there any need to sort of walk in prices or anything like that as you continue on your work there?
Yes. So thanks for the question there, Ryan. I mean, overall from From a capital cost perspective on Media Luna, we are seeing some inflationary pressures there obviously compared to what was previously disclosed within the PEA. So we are seeing some overall upside. I mean nothing that I think at this point would drive us to do anything fancy in terms of kind of locking in Certain FX rates or certain commodities, we are continually looking at hedging as being an appropriate tactic to help manage capital costs looking forward.
But I think as you highlighted and highlighted in my material, we are sitting now on a very strong balance sheet $350,000,000 of available liquidity and still feel that we can comfortably self fund Media Luna going forward if that's what we choose to do. So I think we're in a good position, even notwithstanding inflationary pressures that we're seeing across At the moment to be able to execute on that capital project over the next few years.
And in terms of locking in pricing, Ryan, I'll bolt on one additional comment. As we're entering into contracts on the south side and really putting meat on the bone on our contracting strategy for Medialuna. We're being very careful, A, given that we don't have a construction decision and B, I'm very, very hesitant to lock in pricing at the peak of pricing, for example, for steel. And so we're maintaining some optionality around receiving the benefit of price reduction around receiving the benefit of price reduction as 2022, 2023, 2024 move on, on commodity specific contributors like steel.
Got it. Yes. No, I mean, my question was more related to sort of the gold price and locking in The gold price from ELG, but I think Andrew covered that.
Our next question comes from Spencer Lehman, Private Investor. Go ahead please.
Good morning, Jody. Yes, I'm just a private I'm a long term shareholder. I'm not an analyst. And great report. A lot of it is pretty technical.
I just wondered if you can maybe simplify a little bit for me in sort of layman language. And in regard to this big decision on Media Luna, I think I understand it except just summarize it for me simply as far as what are the downsides And not going through with the monorail at this point. I mean, obviously, that's probably Wonderful technology and exciting, but doing the conventional way, I can see it as less risk for the company and the shareholders. But what are you giving up with that decision? What's the downside of it?
So first of all, Spencer, thank you for dialing in and thank you for your holdings. We always appreciate our long term shareholders because Torex is the kind of company that has a long term view driving business value over the long term. So thanks for that. Quite frankly, I don't see any real downside in not deploying the Mackay technology at Medialuna. Like any decision in business or in life, it's a risk versus reward decision.
And given the maturity of the technology, the rewards that maybe would have been available if the technology had been a couple of Advanced weren't readily available to us. And so we were looking at a lot more risk than potential upside. So on that basis, that decision was taken. It's really a size of the stakes consideration for Torex.
Once you do the conventional, could you do the monorail in the future?
Yes. I mean, interesting that you raised that. And so we haven't done a lot of down deep drilling below the Medialuna deposit. And so if for example, we ramp in conventionally around that deposit, mine conventionally around that deposit, do some further exploration work down deep, get some interesting drill holes down there. We could definitely do a steep ramp, down under that deposit and deploy the Muckahi technology there on a smaller scale.
Got you. Okay. A great balance sheet. What's with the increased cash now? What is the current book value, equity per share as of June 30?
I don't have that to hand, Spencer, but we can circle back with you on that.
Well, I think it was $11.70 or something March. Would you say it's up to up a little bit more?
In terms of our book asset value, I think it's relatively consistent with where it was at Q1 and cash balance has increased and that's been offset from an asset value basis by some depreciation during the quarter.
Okay. It will be out when you get when we get all the final it's an old fashioned index, but it's always interesting to know what the book value is. I'm 85 years old, so some of these things are old fashioned.
The old fashioned stuff is old fashioned because it's work, Spencer. So we can get back to you with that for sure.
All right. Okay. Thank you.
Thank you.
This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.